Supply Chain Division Mandesh Dosanjh

Logistics Grocery

Operations Quality

Assurance

Retail Service Centres

Supply Chain

Specialty Services

Traffic & Customs Measurement & Analysis

Space Management

Quality Services

Laboratory

New Programs, New Regulations, New Business Opportunities!

Specialty Services

• Products of the World • Specialty Boutique Sections (in select LCBO stores) • E-Commerce

Quality Assurance

• Updates on value and requirements

Durham

London

Ottawa

Thunder Bay

Toronto

5 RETAIL SERVICE CENTRES

1,500+ STORES/DEPOTS

Overseas

Domestic/US/Mexico

SUPPLY CHAIN NETWORK

SUPPLIERS FROM OVER 86

COUNTRIES

• Department Highlights • Total Sales $236 Million

• Consignment/Private Orders - $125 Million • Kegs - $111 Million

Highlights continued......

Wholesale customers Partnership and Collaboration with Agents Unparalleled access to niche products Infrastructure in place for rapid growth

Specialty Boutique Sections and E-Commerce

Products Of The World Specialty BOUTIQUE Sections & e-Commerce

Increased Product

Selection

Increased Commercial

Opportunities SUCCESS

Products Of The World

POTW E-Commerce

POTW Boutique Sections

Consignment Brands/Agents

Non-Consignment

Brands/Agents

Consignment Brands/Agents

Non-Consignment

Brands/Agents

SYNERGY

POTW Boutique Sections and e-Commerce are connected.

Products Of The World: Specialty Boutique Sections

Opportunities: • Expanded sales opportunities

for agents and suppliers

• More brand visibility

• Introduction of beer

• In store tastings

• On-line Marketing collaboration

Leverage Cultural occasions and

festivals

Transit shelter ads, multicultural radio

spots, in store enhanced signage, enhanced tastings

Support new store openings

In store signage,

transit shelter ads, radio, lcbo.com,

social for lcbo.com, name tags

Continued store enhancements

and product expert support

Identify an expert, interview for

lcbo.com, name tags, shelf talkers picks

Continue to drive mass awareness

to designated stores and online

Radio, trade shows, integration into

existing marketing materials, lcbo.com,

digital

THE CUSTOMER EXPERIENCE Build mass awareness and demand for the Products of the World program by promoting

our best in class product collections that allow the customer to enjoy unique products from distinct locales around the world, available in-store and online.

Integration into Shopping guide

Out of home advertising Community Ethnic papers

Bag Stuffers Social media owned channels

Boutique Section Performance Summary

Targeted sku levels have been exceeded in all stores

Brand Selection

Products of the World (POTW)

Country Initial Target Launch Today Difference (target to current)

Greece 40 40 93 53 Portugal 55 55 89 34

Spain 60 38 78 18 Kosher 15 15 61 46

Argentina 30 30 57 27 New Zealand 20 40 45 25

East Asia 20 75 103 83 Chile 20 35 49 29

Australia 50 50 112 62 South Africa 20 70 72 52

Germany 10 45 55 45 Italy 220 450 413 193

California 150 150 153 3 Total 710 1093 1380 670

Next Steps: • Review sales performance data to date • E-commerce primary focus • Shift to regional focus? • Additional locations?

Products Of The World

Country Store Store Location Launch Date

East Asia 703 Toronto May 11th

Looking Ahead

• Focus on diversified product mix and price points

• Maintain strong partnerships with boutique stores and store staff.

• What about sales to licensees?

Agent Opportunities

Continued evolution of this exciting program

• In-store tasting opportunities for POTW

• Pilot Programs • Single bottle purchase • Gift kits

New Opportunities

E-Commerce Sales Products Of The World Only

Questions...?

• General Inquiries: Productsoftheworld@lcbo.com • Products of the World Team:

• Retail Operations • Supply Chain • Sales, Marketing & Insights • Store Development and Real Estate • Corporate Communications

QUALITY ASSURANCE UPDATES AT A GLANCE

Quality and Safety

Quality Programs

Compliance Testing

Chemical analysis

Sensory analysis

Label review

Packaging review

New Products & Annual Review Testing

Lifecycle Submissions

Customer Complaints

Retail Investigations

2016-2017

• 17.4% - # of samples

• 14.3% - # of tests

• Lab turnaround: 3.5 days

Laboratory Testing

23,899 23,099

24,561

28,836

508,402 509,900

554,252

633,277

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

13-14 14-15 15-16 16-17

Fiscal Year

Samples Processed Number of Tests

New analyses introduced since 2013-2014: • Metals: cadmium, cobalt • Caffeine • Artificial sweeteners

Laboratory Analyses

Alcohol analysis • NIR Analyzers for wine,

beer testing • Distillation units for

spirits

Investment in Technology

Effective July 10, 2017 • Wine/beer: $225 • Spirits: $200 Invoices posted on iSupplier

Laboratory Testing Fees

2016-2017

• 18% # label reviews

• 9% # packaging reviews

Label and Packaging Compliance Testing

14,061 17,267

24,114 28,550

6703

6344

6008

6551

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

13-14 14-15 15-16 16-17

Sam

ples

Pro

cess

ed

Fiscal Year

Label Reviews Packaging Reviews

2016-2017: • 80,000 Product quality complaints

• 781 Flagged for investigation • 216 Full investigation

• 29 Product Recalls

Product Quality and Safety

Durham RSC • QA Expansion

• Non-compliant loads • Corrective work

• Labelling • Packaging

• 2016/2017 • 660,317 cases corrected

• 12 %

Quality Services Efficiencies

Effective June 1, 2017 • Product recall • Re-work services

• Non-compliant pallets • Packaging • Labelling

Quality Services Fees

Regulatory Updates

Food safety Consumer protection Fair and secure marketplace

Food Labelling Modernization Initiative

Safe Food for Canadians Act

Clear, simple, concise, and easy to understand language & format

Improved legibility Ingredient lists Common name

Reveal ingredients in class names

Public Consultation

Ingredient Lists Grouping sugars Naming dyes Readability Format requirements

Changes

Allergen declarations Nutrition facts tables

Nutrition claims Artificial sweeteners

Single serve sizes

Changes

Compliance Timelines

New regulation in force as of: December 14, 2016

Full compliance at point of sale/ retail: December 14, 2021

LCBO Implementation A staged approach

Communication Preparation Label examinations against new

requirements Submission stage Product-in-hand

Corrective work

CFIA - Food Labelling for Industry website

Food and Drug Regulations Labelling Consultants

Resources

Modernized Beer Standard

CFIA Beer Canada

Food Labelling Modernization Initiative Public consultation:

2014 Stakeholders review:

2016-2017

• Sugars: max. 4% w/v Sugars analysis

• Elimination of separate standard for:

• Stout • Ale • Porter • Malt Liquor

• Addition of (under review): • Herbs, spices • Flavouring preparations – not

resolved

Changes

LCBO Product Packaging Standards & Guidelines for Chemical Analysis LCBO Product Packaging

Standards LCBO Chemical Guidelines

Other Updates

Thank you

dorina.brasoveanu@lcbo.com barb.chapple@lcbo.com

quality.assurance@lcbo.com